The state pension age will increase to 66 from 2020, the chancellor said today, costing everyone under the age of 57 at least £5,000 in lost income. It will cost some women up to £15,000.

Pension savers were also hit by measures limiting annual increases in occupational pensions and top-up benefits designed to reward saving.

More than three million people who expected to retire at 65 will lose out from the measure after George Osborne surprised the Commons with new rules bringing forward by six years the previously scheduled date of 2026.

Osborne said an extra year of working was necessary to pay for the resurrection of the earnings link for state pension increases from 2012. "Raising the state pension age is what many countries are now doing, and will by the end of the next parliament save over £5bn a year – money which will be used to provide a more generous basic state pension as we manage demographic pressures," Mr Osborne said.

Women will be the biggest losers, said pension experts. A transition period from 2018 will allow men two years to adjust to the new rules, but women face an accelerated transition from 2016 to take account of their existing retirement age of 60.

Pension analysts Towers Watson said that a woman born on 5 April 1953 could claim her state pension one month short of her 63rd birthday, while a woman born a year and a day later would be forced to wait until she was 66.

"The extra three years of income could be worth more than £15,000, just looking at the basic state pension, and could be much higher for women with substantial entitlements to Serps or the state second pension. It may have been fairer to start the changes earlier but implement them more gradually," Towers Watson said.

Current pensioners kept winter fuel allowance payments, free bus passes and free TV licences for the over-75s – benefits that had been threatened with the axe. Yet pension savers lost out as the government moved to scale back the means-tested pension credit. Top-up payments will be frozen for four years, saving £180m a year.

Tom McPhail, pensions expert at Hargreaves Lansdown, said: "The chancellor's decision to freeze the maximum savings element of pension credit will cause a significant cut in retirement income for about one in six pensioners."

Pensioners with occupational pensions will be hit by measures following the decision to link annual rises in final salary schemes with the lower consumer prices index (CPI) measure of inflation rather than retail prices (RPI).

The government expects to save around £150bn on public sector pension payments over the next 40 years. Private sector firms could save £100bn over the same period as they award rises of around half a percentage point each year.

Osborne said he expected changes to save the government £1.8bn a year by 2014-15, which would be the third largest saving outlined in the spending review.

He said that any increases in pension contributions should be "staggered and progressive", with the lowest paid and members of the armed forces being protected.

While he argued those who gained the highest pensions from final-salary schemes should be expected to pay the most, he ducked imposing rises this year.

The previous Labour administration followed the recommendations of Lord Turner's pensions commission when it said the state pension age should rise to 66 by 2026, to 67 by 2036 and to 68 by 2046.

Last year Osborne said he wanted to go further, but was embarrassed when he announced plans to bring forward the state pension age to 2016, and said the move would save £13bn by 2020. He was forced to drop the proposal when he discovered the savings would be lower and that most women would still be entitled to retire at 63 in 2016.

During the summer, the coalition government revisited the subject with a public consultation on bringing forward the first element of this plan to compensate for people living longer. Osborne repeated his view that leaving the state pension age at 65 "was not an option".

The timescale for raising the pension age to 67 and 68 is now also likely to be accelerated, the government said.